I don’t like to sugar coat things. At the moment it feels a bit like a scavenger at a sewerage treatment plant. Sifting through loads of crap until I find the gold. I’m not paid to sell them a polished turd or a pig with lipstick. I like to ensure my clients are buying quality and that takes time and patience. There’s not a lot of quality stock out there so it makes buying carefully even more critical.
Buying property is the most expensive purchase that most people will make. This is drummed into people’s heads all the time. However many are spending hundreds of thousands of dollars, often without carrying out some basic precautions. Especially with the advent of some clever marketing tactics by sales agents.
Here are some of the biggest mistakes when buying property.
- Not pre-approved – since the Royal Commission into banking as well as regulatory changes obtaining finance has become without a doubt more challenging. I am regularly hearing examples of applicants expenses being questioned for things like gift vouchers for baby stores, transactions in gentlemen’s club for bucks nights and even taking out money at your local for a schnitty and schooner. All these in the bank’s eyes are high risk, that is, either you’re pregnant, you waste money on strippers or you have an alcohol/gambling problem. If you can jump through the hoops and have a pre-approval you can at least start shopping with confidence that you should be able to get a loan to buy that property.
- Falling for the furniture – You are buying a house, not the bloody couch. Stylists amp up the atmosphere in a house and this leads to a higher price for the vendor. Nothing wrong with that. Except if you are buying. Look past the furniture and look at the space. Look behind cabinets to find if the power points or tv outlets are actually where the tv has been staged. Consider the type of furniture used, smaller items in small rooms to make them feel bigger. Glass top tables in small dining areas. Are they using furniture to hide the fact there is no storage in the room? Candles can hide odours such as damp or animal smells. Keep this in mind when reinspecting.
- Not enough due diligence – I recommend all my clients get their contracts reviewed thoroughly. Ask questions about zoning, mine subsidence (a big issue in Newcastle), bushfire and flooding. All these can impact on your future plans to redevelop the property. Ask and double-check the building approvals. Speak to your legal representation. Recently there have been a number of properties where there hasn’t been approval for works and the agent hasn’t been made aware of it. Or worse the agent thinks it’s not necessary to have council approval despite qualified advice saying otherwise. Don’t listen to what you want to hear, the agent is trying to sell the property and if they are hiding or minimising a major issue there is a fair chance they won’t care if it ruins your plans with the property either. Go to the nth degree to ensure everything is as it should be. I advise all clients to get pre-purchase electrical reports, I’ve had a number of properties lately where simple things like smoke alarms are inoperable, live wiring is left lying around or worse still recalled electrical wiring has been used and not removed. For a small cost, even a newer property such as my own, had some “creative wiring” carried out.
- Relying on vendor-supplied reports – it may seem like a good way to save a few hundred dollars by using a building report supplied by the vendor. Depending on when these reports were done they could already be out of date, rectification works could have taken place or issues could have gotten worse. On top of the fact, I seldom see a thoroughly detailed report. In one case $100,000s of repairs were missed in the vendors supplied report. While most I’ve seen costs of at least $1000s missed. When spending hundreds of thousands of dollars, why skimp on a few hundred dollars to make sure what you are buying really is what you think you are buying. In some purchases recently if it wasn’t for our own independent report we would have not realised a verandah had been enclosed without approval and jeopardised our client’s ability to extend the property in the future.
- Reluctance to pay for help – this ranges from not wanting to shell out for independent reports by having a “builder mate” check it out, using budget conveyancing services to not having independent representation when bidding at auction. The cost of taking a short cut is often a lot higher than doing the right thing in the first place. An auction bid service starts at $550 including GST with a success payable of $550 inc GST. The average bid at an auction is often approx $10,000 so having someone who knows when to bid and how much can make a huge difference.
There are so many other pitfalls when buying property but by having an independent buyer’s agent on your side you may be able to avoid making a costly mistake.
If you need help to buying property, whether you are a first time buyer or investor, upgrader or empty nester, get in touch today on 0438502371.